Pivot to readers!

At The Atlantic, Derek Thompson writes about the "media apocalypse."

2017 has been a uniquely miserable year in the media business, in which venerable publications and fledging sites, divided by audience age and editorial style, have been united in misery. At Vanity Fair, the editorial budget faces a 30 percent cut. At The New York Times, advertising revenue is down $20 million annually after nine months. Oath, the offspring of Yahoo and AOL’s union, is shedding more than 500 positions as it strains to fit inside of its Verizon conglomerate. Meanwhile, almost every digital publisher seems to be struggling, selling, or soliciting, whether it’s the media company IAC exploring offers to offload The Daily Beast, Fusion Media Group offering a minority stake in The Onion and former Gawker Media sites, or Mashable selling for a fifth of its former valuation. So many media companies in 2017 have reoriented their budgets around the production of videos that the so-called “pivot to video” has became an industry joke. Today, the pivot seems less like a business strategy and more like end-of-life estate planning.

Even the crown princes of digital upstarts, Vice and BuzzFeed, are projected to miss their revenue targets by 20 percent each, which amounts to a combined shortfall of hundreds of millions of dollars. Finally, this week, Time Inc., the storied publisher of magazines and websites, including People, Sports Illustrated, and Time, announced it had reached an agreement to be sold to the Meredith Corporation, whose focus on lifestyle is inspiring rumors that it may yet offload or even shut down Time, Fortune, and Money.

...In 2016, 90 percent of websites reported that unique visitors on mobile devices had eclipsed desktop; and 90 percent of the growth in digital advertising came from just two companies, Google and Facebook.

...In 2017, Google and Facebook are projected to account for about 61 percent combined of the U.S. digital ad market. No other company comes even close.

...Realizing that sites like Vocativ will never reliably reach audiences even one-tenth the size of platforms like Snapchat, investors will simply cut off funding and force sites to sell at a huge discount, like Mashable, or simply close. It won’t necessarily be “a full-blown crash,” as Marshall gloomily predicted. It will be a far more awkward landing, as several companies redefine themselves as video producers, then tech companies, then data-driven storytellers, before they run out of money.

...the Trump effect isn’t all negative for digital-media companies. Fear of and fascination with the president has supercharged an old-fashioned revenue source for news publishers—readers. Subscription revenue has been record growth at The New Yorker and The Washington Post. At The New York Times, revenue from digital-only subscriptions jumped 44 percent—or $75 million—in the first nine months of 2017, compared with the same period from last year. That’s three times larger than the $20 million of lost advertising revenue over the same period.

In short, President Trump has pulled forward the future of news by accelerating both the decline in digital advertising and the rise of reader subscriptions.

...Advertising has been critical to the affordable distribution of news for a century and a half in the U.S. Today’s media companies don’t have to reach all the way back to the early 1800s for a business plan, to when newspapers were an elite product, selling at the prohibitive price of six pennies per bundle. But they are going back in time, in a way, and excavating a dusty business model that relies more on readers, and less on advertisers, than the typical online publisher. The New York Times is leading the trend. In 2000, circulation revenue accounted for 26 percent of its business. Last quarter, print circulation and online subscriptions accounted for 64 percent of the company’s revenue.

Read more here.